Apple to set up AirTag production factory in Batam to meet 65 per cent of global demand, says Indonesian minister

JAKARTA: Tech giant Apple will open a facility in Batam by early next year to manufacture its AirTag tracking device, said an Indonesian minister.

Investment Minister Rosan Roeslani said the new facility will supply 65 per cent of what Apple needs to fulfil its global demand for the AirTag.

The small coin-shaped device was billed by the firm as an easy way to track one’s belongings. Apple’s move is seen to be aimed at nudging Jakarta into lifting the country’s sales ban on the iPhone 16. 

Rosan on Tuesday (Jan 7) said that the firm has “fully committed to the first phase of construction for this AirTag factory”, news agency Antara reported. 

According to the Jakarta Globe, the factory in Batam is part of a US$1 billion investment that Apple has promised to invest in Indonesia. 

“This is just the initial phase and there will be more of Apple’s vendors coming (to Indonesia) so the US$1 billion investment promise will eventually increase,” Rosan said.

Apple this week began another round of negotiations on the company’s investment plans in Indonesia by sending its vice-president for global government affairs Nick Ammann to discuss with the authorities, including Rosan as well as Industry Minister Agus Gumiwang Kartasasmita.

Tempo reported that Ammann had previously met Rosan in November last year after Indonesia banned the sale of iPhone 16 the month before. 

Southeast Asia’s largest economy said that the firm had failed to meet local content regulations which require that at least 40 per cent of components or production processes originate in Indonesia as the country seeks to boost investments from giant tech companies. 

In response, Apple initially proposed US$10 million in new investments to Indonesia, later increasing the offer to US$100 million.

Last month, Apple again increased the offer to US$1 billion - an amount that President Prabowo Subianto had deemed acceptable, according to sources cited by Bloomberg on Dec 19.

Rosan on Tuesday said that Apple’s investment approach in Indonesia will likely be similar to its investment in other Southeast Asian economies - Vietnam has over 30 Apple suppliers while Thailand has more than 23 vendors. 

The minister further claimed that Apple had already “taken a look” at its potential manufacturing site in Batam.

“The (construction) should begin immediately, we are targeting to have this facility completed by early 2026.”

While Rosan appeared to suggest promising developments in the negotiations, Agus commented that the US$1 billion investment promise is still “insufficient”. 

Tempo reported that Apple has to meet four of the “fairness principles” established by Jakarta, including assessing the tech giant’s investment activities in other countries, investments made by other mobile phone manufacturers in Indonesia, the potential for increased value and income for Indonesia and the creation of local employment opportunities. 

“We want to see how big Apple’s investments are in other countries, for example Vietnam and India and secondly, how much has Apple’s competitors like Samsung, Xiaomi and Huawei has invested in Indonesia,” Agus was quoted as saying by the Jakarta Globe. 

He added: “Most importantly, (we want to see) how big is the job creation from Apple’s investment.”

He further said that Indonesia does not want to decide on a deadline for Apple to invest in the country, noting the tech giant should take its time to ensure that its investments would create as many jobs. 

“We don’t set a time frame, we can reach a done deal today, tomorrow or next week or even next month … all that matters to us is the substance (of the investment),” he added. 

Meanwhile, Ammann - the Apple executive - told reporters that he had a “great discussion” with the Indonesian ministers. 

According to Reuters, Apple currently has no manufacturing facilities in Indonesia but has set up application developer academies since 2018 that allows it to sell older models of its products.